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Virgin Blue signs up for open skies to the US

Scott Rochfort

Virgin Blue has been given the all-clear to launch ten weekly flights to North America by November, after Australia and the United States signed an Open Skies Agreement.

The deal will now allow Virgin offshoot V Australia and another Australia or US carrier unrestricted access on the route.

The agreement will remove a cap which restricted airlines from both countries flying four weekly flights in their first year of operation on the route.

"The United States is Australia's third largest aviation market and this agreement removes restrictions on Australian and US airlines starting services and routes between the two countries and beyond to third countries,'' Mr Albanese said in a media release.

Mr Albanese argued the deal will help stimulate the tourism market, which has suffered due the lack of available seats on the capacity constrained route. But the deal will keep Air Canada and Singapore Airlines, who have expressed a desire to fly between Sydney and Los Angeles, off the route. So far, no US carriers have expressed a desire to join United on the route.

"Over time this will lead to greater choice through increased competition and provide significant employment opportunities for Australians in the aviation and tourism industries,'' Mr Albanese said.

Qantas welcomed the decision despite lobbying hard in the past to keep foreign carriers such as Singapore Airlines off the highly lucrative route.

"We welcome the outcome. It brings new opportunities for growth and competition,'' said Qantas chief executive Geoff Dixon.

"Importantly, it will assist the further development of Australia's aviation industry, as well as help increase trade and tourism with a major economic partner,'' he said.

It is suspected Qantas supported the Open Skies deal on the hope it will bar Singapore Air's attempts to get on the route for good. The logic being Qantas would prefer to have less experience competitor like V Australia.

The Howard Government barred Singapore Air from the route two years ago to give Virgin Blue time to launch an airline on the US route, arguing it would be good for Australian jobs.

Qantas makes an estimated 20 per cent of its overall profits from the route and is set to increase its domination of the route.

It plans to increase its flights from 48 to 51 a week , meaning it will control 80 per cent of the direct flights.

Qantas deployment of the A380 superjumbo on the US route later this year is set to further aid its ability to offer more seats. United Airlines is presently Qantas's only competitor on flights between Australia and the US with 14 flights a week.

V Australia will intitially only have a marginal impact, given it plans to have 10 weekly flights on smaller Boeing 777 jets.